The military AI industry is expanding rapidly as global military expenditure climbed to $2.88 trillion, according to data from the Stockholm International Peace Research Institute (SIPRI). Driven by software integration and screen-based combat systems, traditional defense primes and software-first startups are securing multi-billion-dollar contracts to transform national armed forces into AI-first fighting units.
Defense Primes and Hardware Integration
Traditional arms manufacturers that have supplied military hardware for decades are now layering artificial intelligence directly onto existing combat systems, according to SIPRI. Part of that financial rally reflects how deeply software is woven into legacy product lines.
Lockheed Martin announced in February that it was flight-testing an AI tool for its F-35 fighter jets to help pilots identify hostile aircraft faster, according to company reports. Similarly, L3Harris built AI directly into camera systems for real-time targeting. These camera platforms are fitted with systems like Shield AI’s Tracker, a tool designed to detect hostile drones, according to defense disclosures.
Pro Tip: When analyzing defense tech portfolios, researchers at SIPRI categorize the market into four distinct pillars: traditional defense primes, software-first neoprimes, big tech cloud providers, and foundational AI model labs.
Neoprimes and Software-First Startups
A newer category of software-first firms, often called neoprimes, is selling specialized data and decision-making products directly to the arms market, policing agencies, and border forces.
Project Maven relies on artificial intelligence and machine learning to automatically sift through satellite imagery, drone videos, and signals intelligence to identify and prioritize targets. The system is deployed in various active conflicts, including the Ukraine war and the US-Israel war on Iran, where Maven identified 1,000 targets in the first 24 hours of fighting, according to military sources. A direct competitor is Anduril’s Lattice platform, which ties unmanned drones, sensor towers, and autonomous vehicles into a single command network utilized heavily by the US Army.
Big Tech and Cloud Infrastructure
Technology giants controlling roughly 67 percent of the global cloud infrastructure market—including Google, Meta, and Amazon Web Services (AWS)—are increasingly linked to military applications, according to market data. The US Department of Defense announced a new agreement in May with eight tech and AI companies to deploy their technologies across classified networks.
Agreements with SpaceX, OpenAI, Google, NVIDIA, Reflection, Microsoft, Oracle, and AWS were brokered to accelerate the transformation of the US military into an AI-first force. These deals clear the tech firms for IL6 and IL7 networks, which represent the most sensitive and classified computing environments operated by the Department of Defense, according to government disclosures.
Did You Know? The Pentagon signed contracts with eight of the world’s leading tech companies to integrate advanced computing into classified military networks, marking a significant shift in defense procurement.
Foundational AI Model Providers and International Markets
Foundational model providers round out the sector by building the underlying artificial intelligence models that other companies integrate into military tools. In the US, these include OpenAI and Anthropic, while Mistral AI operates as a primary European provider. In China, researchers have developed military AI models since the early 2020s, utilizing Meta’s Llama model as the base for a People’s Liberation Army (PLA) tool called ChatBIT, according to Reuters reports.
ChatBIT is designed to gather intelligence and support decision-making in the field. The Pentagon estimates Chinese military AI spending is comparable to American figures, sitting at approximately about $1.5 to $2bn annually. The US Department of Defense added Alibaba, Baidu, BYD, NIO, RoboSense, and Unitree to its Chinese military companies list, citing their alleged support for China’s armed forces, according to Reuters.
Frequently Asked Questions
What is a military neoprime?
Neoprimes are software-first defense startups—such as Palantir and Anduril—that specialize in data products, autonomous systems, and command-and-control software for modern armed forces.
How much do governments spend on military AI?
Global military expenditure reached $2.88 trillion, with governments pouring record sums into defense budgets, while US and Chinese annual spending on military AI alone is estimated comparable between American and Chinese figures.
What is Project Maven?
Project Maven is the Pentagon’s flagship military AI program that uses machine learning to automatically analyze satellite imagery, drone footage, and signals intelligence to prioritize battlefield targets.
Which tech companies have clearance for classified military networks?
The US Department of Defense cleared SpaceX, OpenAI, Google, NVIDIA, Reflection, Microsoft, Oracle, and AWS for IL6 and IL7 classified computing environments.
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